The government is planning to undertake another review of the model contract for Toll Operate Transfer (TOT) mode of monetisation of highways, to make it more viable and boost investor interest.
The revised draft of the concession agreement could be ready in April. The new norms, to be announced after the review, are expected to address concerns of the government too. Currently, s Infrastructure Investment Trust (InVIT) is seen to deliverg better returns, compared to ToT model for the government. There have been reports that the government is more in favour of InVIT rather than ToT.
“There may be some issues about the ToT. Some policy rethinking has been going on in the ministry but the decision of the government especially the committee headed by the Cabinet Secretary called Committee of Secretaries on Monetization is that two tools of monetisation – ToTs and InVIT – will keep going,” the officials added.
Both the modes of monetisation will be used to meet the aggressive target for highway monetisation in the next National Monetisation Pipeline (NIP). The NIP for next five years will have a target of Rs 10 lakh crore of which Rs 3.5 lakh crore will come from highways.
The last review of the Model Concession Agreement (MCA) used for monetisation of publicly funded operational national highways was done in March 2024. This review reduced the time period between the two reviews of toll collection on monetised highways to five years from seven years.
This change ensures that any variations in toll collection are addressed promptly, and corresponding changes are made to the concession period. It also allows for three reviews instead of two during the validity of concession period for highways monetised under ToT.
It also cut down the degree of variance in toll collections against the projected numbers that will trigger a review of the concession period to 5% from 20% and 30%. Now if the collection is 5% less or more than projected it will lead to change in concession period.
The government will also come out with a revised MCA for highways to be developed through Build Operate Transfer (BoT) mode in April. The aim of MCA revision exercise for BoT is to balance the risk between the the government and the private developers.
The Ministry of Road Transport and Highways (MoRTH) now insists that pre-construction preparations and activities must come to a definitive conclusion before the letter of award is issued.
Revitalising BoT is essential as the government now aims to focus on high-speed corridors for efficient logistics that require massive amounts of capital. The plan is to take the length of high speed corridors to 50,000 km from 4,500 km now.